NZ services sector activity slows in August

People working in the services sector produce services rather than products, with jobs including housekeeping, nursing and teaching.

New Zealand's services sector, which accounts for almost two-thirds of the economy, slowed in August as dwindling activity in the South Island dragged on the national figure.

The BNZ-BusinessNZ performance of services index fell 4.9 points to 53.2 last month in the lowest reading since January, and was up from 51.2 in August 2012. A reading above 50 indicates expansion in activity.

The national reading was dragged lower by shrinking activity in the South Island, with Canterbury/Westland recording 42.1 and Otago/Southland 36.5. That compared to a reading of 55.5 in the Northern region, and 53.5 in Central.

BNZ economist Doug Steel said the slower activity in the South Island was a little bigger than the typical effect of winter and would be worth watching to see if the contraction was more than monthly noise.

"It is difficult to get too downbeat on a couple of weaker details in today's PSI," Steel said. "At this stage, the trend in a wide range of indicators is firmly upward."

Activity was led by property and business services at 59.2, followed by retail at 58.5. Wholesale reported a reading of 52.2 and health and community services recorded 51.4.

New orders/business and activity/sales both reported readings of 55.2, followed by stocks/inventories at 53.6 and supply delivers at 53.4. Employment was flat at 50.

The combined manufacturing and services index, the BNZ-BusinessNZ performance of composite index slowed to 54 from 58.3 in July on a GDP-weighted basis, and fell to 55.6 from 59.1 on a free-weighted basis.